Poverty Reduction and Growth Trust Interest Rate Mechanism - Extension of Temporary Interest Rate Waiver PDF Download

Author: International Monetary Fund. Finance Dept.
Publisher: International Monetary Fund
ISBN: 1498339573
Category : Business & Economics
Languages : en
Pages : 6

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Book Description
In recent months, a number of Directors have expressed support in the Executive Board for a further extension of the temporary exceptional interest waiver on concessional lending. An extension would send a signal of the Fund’s continued support for Low-Income Countries at a time when the global economic crisis is still ongoing. In view of the related downside risks to the global economic recovery and a decline in the ability of Low-Income Countries to respond to a further weakening of global growth, this paper proposes a further extension of the exceptional interest waiver by two years, to end-2014. This paper also proposes to further extend to April 2013 the existing subsidization of the rate of charge on outstanding Emergency Natural Disaster Assistance and Emergency Post-Conflict Assistance purchases by PRGT-eligible members.

Author: International Monetary Fund. Finance Dept.
Publisher: International Monetary Fund
ISBN: 1513507761
Category : Business & Economics
Languages : en
Pages : 15

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Book Description
This paper reviews the Poverty Reduction and Growth Trust (PRGT) interest rate structure for the period July 2019–June 2021. Since the interest rate mechanism was first established in 2009, no interest has been charged on PRGT credit. In line with the package of reforms proposed in the parallel Review of LIC Facilities, this paper proposes to align interest rates on the SCF with those on the ECF. Based on the average SDR rate over the most recently observed 12-month period, the proposed revised interest rate mechanism would result in zero interest rates on both ECF and SCF credit for the period July 2019–June 2021.

Author: International Monetary Fund
Publisher: International Monetary Fund
ISBN: 1498342531
Category : Business & Economics
Languages : en
Pages : 12

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Book Description
This paper provides the basis for the second review of the interest rate structure approved under the 2009 reforms of the Fund’s concessional lending facilities. Based on the application of the Poverty Reduction and Growth Trust (PRGT) interest rate mechanism, PRGT interest rates for 2015–16 would be zero percent for both the Extended Credit Facility (ECF) and Rapid Credit Facility (RCF), and 0.25 percent for the Stand-by Credit Facility (SCF). The interest rate on remaining balances of the Exogenous Shock Facility (ESF) is not set by the PRGT interest mechanism and it would be 0.25 percent. In accordance with the PRGT Instrument, the next review of PRGT interest rates will take place by December 31, 2016.

Author: International Monetary Fund. Strategy, Policy, & Review Department
Publisher: International Monetary Fund
ISBN: 1498345328
Category : Business & Economics
Languages : en
Pages : 16

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Book Description
This paper reviews the interest rate structure that would apply to the PRGT in 2017–18. Based on the interest rate setting mechanism agreed in 2009, the interest rate for the Extended Credit Facility (ECF) would be zero and the rate for the Standby Credit Facility (SCF) would be 0.25 percent. The interest rate for the Rapid Credit Facility (RCF) was set permanently at zero in July 2015. Since the current mechanism was agreed, the Executive Board has granted successive exceptional interest waivers on all outstanding Fund concessional credit, setting all interest rates charged at zero percent. These waivers have been extended three times, providing interest rate relief to many low-income countries at a time when they faced considerable headwinds from the global economic environment. A strong case remains for maintaining zero rates on Fund concessional credit at the current global economic juncture. The global outlook for LICs has not significantly improved since the last review and downside risks remain significant. At the same time, many Directors noted at the last review in 2014 that the possibility of a prolonged period of very low interest rates warrants an early re-examination of the mechanism, including an exit strategy from repeated application of the waiver, with the objective of safeguarding the self-sustaining capacity of the PRGT. The paper seeks to respond to this call. It proposes that the PRGT interest rate mechanism be amended to accommodate anomalies created by a prolonged period of very low interest rates. Specifically, a new threshold is proposed whereby both the ECF and the SCF rate would be set at zero when the 12-month average SDR rate is less than or equal to 0.75 percent. This proposal will likely keep all PRGT interest rates under the mechanism at zero through at least 2020 given current market expectations while incurring only minimal subsidy costs and eliminating the need for continual waivers. In addition, staff proposes to waive interest rate charges on outstanding legacy balances under the Exogenous Shocks Facility (ESF), which are not determined via the interest rate mechanism, until the next review.

Author: International Monetary Fund. Finance Dept.
Publisher: International Monetary Fund
ISBN: 1498340571
Category : Business & Economics
Languages : en
Pages : 32

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Book Description
Commitments under new PRGT-supported programs are expected to increase in 2012 in part reflecting the weaker global economic outlook. PRGT commitments in 2011 amounted to SDR 1.2 billion, unchanged from their 2010 level. Staff projections suggest demand could rise to about SDR 2 billion in 2012. If all elements of the 2009 financing package are secured, the PRGT will have an annual average lending capacity of SDR 2.2 billion over 2012–14, or SDR 1.6 billion through 2015. Additional pledges of SDR 1 billion in loan resources are still required to secure the targeted loan resources approved under the 2009 financing package. Fourteen members have so far pledged SDR 9.8 billion in new loan resources for the PRGT compared with the target of SDR 10.8 billion. New borrowing agreements totaling SDR 9.5 billion have been signed with thirteen lenders.

Author: International Monetary Fund. Strategy, Policy, & Review Department
Publisher: International Monetary Fund
ISBN: 1498341314
Category : Business & Economics
Languages : en
Pages : 35

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Book Description
This paper reviews recent developments in financing of the Fund’s concessional lending and debt relief. It reports the latest available data including the pledges made thus far in response to the Managing Director’s fund-raising requests of August 2009 and February and November 2012 aimed at establishing a self-sustained PRGT. The PRGT’s potential self-sustained capacity is discussed in the context of longer-term projections of the demand for concessional lending.

Author: International Monetary Fund
Publisher: International Monetary Fund
ISBN: 1498344801
Category : Business & Economics
Languages : en
Pages : 44

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Book Description
This paper reviews recent developments in the financing of the Fund’s concessional lending and debt relief since the October 2014 Update. It presents the latest available data including the new commitments of loan resources to the PRGT and the sources of initial financing for the newly created CCR Trust, replacing the PCDR Trust. It also discusses the PRGT’s potential self sustaining capacity in the context of longer term projections of the demand for concessional lending and robustness to alternative scenarios.

Author: International Monetary Fund. Strategy, Policy, & Review Department
Publisher: International Monetary Fund
ISBN: 1498346235
Category : Business & Economics
Languages : en
Pages : 190

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Book Description
This Handbook provides guidance to staff on the financial facilities and non-financial instruments for low-income countries (LICs), defined here as all countries eligible to obtain concessional financing from the Fund. It updates the previous version of the Handbook that was published in February 2016 (IMF, 2016d) by incorporating modifications resulting from Board papers and related decisions since that time, including Financing for Development—Enhancing the Financial Safety Net for Developing Countries—Further Considerations (IMF, 2016c), Review of Poverty Reduction and Growth Trust – Review of Interest Rate Structure (IMF, 2016b), Eligibility to Use the Fund’s Facilities for Concessional Financing (IMF, 2017a), Large Natural Disasters—Enhancing the Financial Safety Net for Developing Countries (IMF, 2017b) and Adequacy of the Global Financial Safety Net – Proposal for a New Policy Coordination Instrument (IMF, 2017c). Designed as a comprehensive reference tool for program work on LICs, the Handbook also refers, in summary form, to a range of relevant policies that apply more generally to IMF members. As with all guidance notes, the relevant IMF Executive Board decisions, including the terms of the various LIC Trust Instruments that have been adopted by the Board, remain the sole legal authority on the matters covered in the Handbook

Author: International Monetary Fund. Strategy, Policy, & Review Department
Publisher: International Monetary Fund
ISBN:
Category :
Languages : en
Pages : 214

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Book Description
This paper reviews Poverty Reduction and Growth Trust (PRGT) facilities and financing. It proposes a comprehensive package of lending policy reforms and financing measures that aims to bolster the Fund’s capacity to support Low-Income Countries (LICs) in addressing their balance of payment needs, while restoring the self-sustainability of the Trust. The Review proposes a long-term self-sustained annual PRGT lending envelope of SDR 2.7 billion, more than double the PRGT envelope before the Covid-19 pandemic, consistent with the expected demand for Fund’s concessional financial support in the years ahead. The paper also proposes to introduce a new interest rate mechanism to better reflect the heterogeneity among LICs and focus further concessional resources to the poorest countries. These countries (currently 31 LICs) will continue to benefit from an interest-free lending under the PRGT, while other LICs will be charged a modest, and still concessional, interest rate. Additionally, the paper proposes to keep PRGT access limits at their current levels and to implement several reforms, including: reverting the PRGT access norm to the level prevailing before December 2023, streamlining and strengthening the PRGT safeguards, adjusting the PRGT eligibility and graduation framework and updating the list of PRGT-eligible countries, extending the temporarily higher cumulative access limits under the RCF until the end of December 2025, and implementing a targeted adjustment to the Policy Safeguards for High Combined Credit Exposure. On financing measures, the paper proposes to address the remaining gap in PRGT subsidy resources after accounting for the lending policy changes through (1) a further five-year suspension of PRGT administrative expenses reimbursement to the GRA and (2) a framework to deploy IMF internal resources to facilitate the generation of PRGT subsidy resources.

Author: International Monetary Fund. Legal Dept.
Publisher: International Monetary Fund
ISBN: 1498342132
Category : Business & Economics
Languages : en
Pages : 38

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Book Description
Based on the Executive Board’s guidance during the first stage of the Review of Low Income Countries (LIC) Facilities, this paper suggests a number of refinements to the facilities and instruments that are consistent with the self-sustainability of the Poverty Reduction and Growth Trust (PRGT). The proposals seek to improve the tailoring and flexibility of Fund support. Taken together with those advanced in the parallel paper on PRGT eligibility, they are projected to keep the average annual demand for PRGT resources within a range consistent with the Board’s approved strategy to make the PRGT self-sustaining over the period 2013–35. The proposals are as follows.